With Tax Day (April 15th) fast approaching in the US, time is running out to file your returns before the deadline. If you’re one of the 1 in 3 Americans who don’t get around to filing their taxes until April, you’ll know that waiting until the last minute is never ideal. However, stress isn’t the only potential problem you face when you’re in a time crunch. If you have to rush the complex process of tax filing because the deadline is looming, you’re more inclined to cut corners when it comes to security in order to save time. This greatly increases your risk of having your personal data stolen.
Many people are unaware of just how serious the risk of a personal data leak is during tax season. Once fraudsters have your data, they can use it for numerous malicious purposes. One of the most common risks is tax identity theft, where fraudsters use your personal details to file large, bogus tax refunds in your name and route the money to their address. On top of that, they can continue to use your sensitive information to conduct scams outside of tax season, including opening bank or loan accounts in your name, charging their purchases to your credit card, and much more.
What’s worse is that personal data theft during tax season is not at all uncommon. 2018 saw a 60% increase in tax-related scams—an alarming figure considering that the rate had been declining over the previous three years. The 2,000 incidents recorded between January 2018 and October 2018 represent millions of dollars in losses, proving that fraudsters are getting smarter. Thanks why it’s more important than ever to take security precautions when filing your taxes.
Thankfully, preventing personal data leaks doesn’t have to be difficult or time-consuming. Here are some simple yet effective ways to improve your tax season security.
Use a strong password
As with all personal data, your tax information should be secured with a strong password. When creating your online tax account, the IRS recommends using a long password containing at least one lowercase letter, one uppercase letter, one number, and one symbol. On top of that, you should always avoid including any details about yourself in your password. It’s common, for example, for people to make their password their child’s name and birthdate. However, you’d be surprised by how easy it to find this information on social media sites like Facebook, Twitter, and more. As such, you should never use easily-sought facts like your family and pets’ names, past schools or workplaces, middle or maiden names, or birthdates as part of a password. If a fraudster can guess your password correctly, they’ll have no trouble breaking into your account and stealing your details or amending your tax return.
Know how to spot phishing
One of the most common ways fraudsters get their hands on taxpayers’ personal data is through phishing attacks. Online phishing is a scam where cybercriminals create fake websites which spoof well-known ones—in this case, the IRS website. They then send their victims emails instructing them to enter their details on the spoof website, capturing their personal information to use however they want.
To avoid this type of attack, familiarise yourself with what a phishing email looks like. Any legitimate IRS email will including your name, while phishing emails usually start with Dear Customer. Since many of them come from overseas scammers, they also usually contain poor spelling and grammar. Most notably, most phishing emails use fear tactics. They’ll often tell you that you’re at risk of legal action if you don’t click the link shown and update or confirm your personal information.
If you do receive an email you think looks suspicious, don’t click on any of the links. Instead, forward it to firstname.lastname@example.org and delete the original email. Currently, the IRS does not ask you to update or confirm your details over email. However, if you are worried about the warnings given in a possible phishing email, you can always go to the IRS website directly and log into your account to check for any problems.
Never pay money over the phone
The other most common type of tax season data theft is the phone scam. Very similarly to online phishing, phone scammers steal your personal information by impersonating the IRS. In almost all phone scam cases, these fraudsters call taxpayers with accusations of fraud and misconduct. They then inform you that you can avoid being arrested or going to court if you pay a fine immediately over the phone. Some scammers even know how to make the number 911 show up on your caller ID when they contact you, making victims even more likely to fall for the scam.
If you do receive a phone call or voicemail of this nature, remember that the IRS will never call you to request payment over the phone. You should never give any personal details out to someone calling you and claiming to be from the IRS. If you’re alarmed by the accusations in these calls, you can call the IRS directly at 800-829-1040 to talk to a legitimate member of staff. To avoid receiving more scam calls, use a call blocking app on your phone.
Use a VPN
A good all-round tip for protecting any personal information online is to use a VPN. A VPN is an online service that routes all your internet traffic through an encrypted, remote server. This can be a very useful security tool during tax season if you need to use public or untrusted wi-fi networks when filing your taxes, preventing any hackers from intercepting and stealing the personal data you’re sending to the IRS website.
Beware of too-good-to-be-true offers
Given how complicated tax filing can be, it’s no surprise that 2 in 3 taxpayers use the services of a tax professional to prepare their returns. This route is even more popular for those who are running out of time to get things done on time. However, while there are plenty of tax professionals out there who follow legal and ethical conventions, there are also numerous fraudsters who pose as tax professionals to steal personal data.
Always beware of offers from so-called tax professionals that sound too good to be true. If a preparer is promising inflated refunds or benefits you’ve never heard of before (such as ‘free money’ for those on low incomes), it’s almost always a scam. Instead of filing your taxes properly and delivering on their offers, they will use your personal information to get large tax refunds in your name. Scam tax professionals also often insist on cash payment only, don’t offer receipts, and can’t provide any references or positive testimonials.
The best way to avoid falling victim to one of these fraudsters is to ask for their PTIN—Preparer Tax Identification Number. All legitimate tax professionals can provide a valid PTIN for 2019 and must include it when they sign your tax return.
Ultimately, it’s a good idea to follow all these tips year-round. While tax season is becoming an increasingly common time for fraudsters to strike and could lose you your well-deserved tax refund, it’s not the only time you’re at risk. Scammers are always lurking and finding new ways to steal personal data. If they’re not filing a fake tax refund in your name, they could be hacking into your bank account, spending on your cards, or selling your details to cybercriminals across the globe. Remember to always stay alert, keep your VPN active when using the internet, and stay up to date on new types of online and offline scams.